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Diversity Emerges In Electronic Market Place
Experts highlight need to bridge cultural divides

5/12/99
By Phillip Kurata USIA Staff Writer

" Washington -- A senior U.S. official involved in the dispute with the European Union (EU) over privacy protection in electronic commerce says harmonization of policy is unlikely and undesirable.

"I think it is unlikely because of differences in traditions, history and personal preferences that we will have the same set of rules everywhere. That's probably good," Elliot Maxwell, Special Advisor to the U.S. Secretary of Commerce for the Digital Economy, said at a recent seminar on Internet-based commerce in Washington.

The United States and the EU have been haggling for months over European demands for guaranteed protection of information about customers, which is required for electronic commerce transactions.

EU law considers that information about an individual belongs to that individual. Europeans take strong exception to the common U.S. business practice of selling data about customers to others companies.

The United States opposes privacy laws on the ground that such legislation could inhibit the growth of electronic commerce, which the U.S. government has identified as the main engine for economic growth in the foreseeable future.

Bradford De Long, a former deputy assistant Treasury secretary and currently a professor of economics at the University of Californiaat Berkeley, says the Internet is a revolutionary technology that will bring social changes as far reaching as electrification and the automobile in the early part of the 20th century.

To calm European fears, the U.S. government has suggested that U.S. companies engaged in electronic commerce with Europe give formal pledges to keep information about their customers confidential. The U.S. Commerce Department says it will monitor the adherence of the companies to their pledges.

This has not been sufficient for the EU. Officials at the EU headquarters in Brussels say they have little hope of reaching a trans-Atlantic data protection agreement in time for the EU-U.S. summit on June 21.

"I would suggest that the EU-U.S. dialogue on privacy is in fact the beginning of a model about how to deal with these questions of interoperability and policy," Maxwell said.

"What this had led to is a recognition of a very large space of shared beliefs between the United States and the EU about the need to protect because it is in the interest of both the United States and the EU," he added.

Erika Mann, a member of the European Parliament, says Europe has been wrestling to formulate norms for electronic commerce among its member states. She compares the European model to an umbrella that allows for different practices among its members.

"You have a European umbrella and, on the other hand, you still have the national and regional differences. This is a good exercise to understand how the world works in general," Mann said.

Companies involved in Internet-related technology account for eight percent of the U.S. gross domestic product but are generating one-third of the growth in the U.S. economy.

Despite the absence of a privacy accord, the EU permits trans-Atlantic data transmissions to continue in order not to jeopardize the growing volume of electronic commerce between Europe and the United States. The European Commission cautions that European lawyers and pressure groups could soon start agitating for stopping data flows across the Atlantic.

Maxwell says the dilemma could be resolved if the United States and the EU agreed to trust each other to implement the privacy principle in a way befitting the local circumstances and culture.

"We will have different implementation of these principles, but they have to be the same set of principles for people to feel comfortable because fundamentally countries tend to want to rely on their own laws to protect their own citizens and to advance their own national interests," Maxwell said.

Andrew Pincus, the General Counsel for the U.S. Commerce Department, says a new paradigm is needed to deal with the social implications of the Internet while ensuring that electronic commerce continues to expand.

"There are distinct patterns of development that are rooted in different ways of organizing markets for networks and commerce. There are different conceptions of what should be intellectual property and the way privacy should be arranged," says John Zysman, of the University of California, Berkeley.

He says there will have to be a reconciliation of American, European and Asian positions on how to structure what will be a fundamental new market place. He says there will not be one Internet-based market place but many.

While the United States and the EU have been dealing with the privacy issue, most Asian nations have not entered the dialogue on structuring the Internet marketplace.

"The Asians tend to like to cut off certain sites from service," says Stephen Cohen, of the University of California at Berkeley. "They don't think you should be looking at things they consider immoral or things they consider politically incorrect according to themselves. They just go the central servers and don't let that stuff in."

Press contact Ann Mine (510) 642-3067; minean@socrates.berkeley.edu